Unit 14Forms of Business
Unit 14 Forms of Business
Forms of businessBusinessSingleorganizationsproprietorshipPartnershipCorporationsFor accounting purposes, all three forms are separatefromtheirowners.Legally,only corporations are separate from their owners
Forms of business Corporations Single proprietorship Partnership Business organizations • For accounting purposes, all three forms are separate from their owners. • Legally, only corporations are separate from their owners
于卡.Single ProprietorshipDefinitionAsingleproprietorship is an unincorporatedbusiness owned by a person and oftenmanaged by the same person. No legal formalities are necessary to organizesuch businesses and usually businessoperations can begin with only a limitedinvestment
Ⅰ. Single Proprietorship Definition • A single proprietorship is an unincorporated business owned by a person and often managed by the same person. • No legal formalities are necessary to organize such businesses and usually business operations can begin with only a limited investment
三下.single ProprietorshipFeaturesThe owner is solely responsible for all debtsof the business.> The business is a separate entity from theowner. Thus, single proprietor must keep thefinancial activities of the business from theirpersonal financial activities.> Net accumulated investment is not reguiredto be distinguished from profit earned. It is theowner's option to invest in the business,withdraw from the business, and distributeprofit
Features ➢ The owner is solely responsible for all debts of the business. ➢ The business is a separate entity from the owner. Thus, single proprietor must keep the financial activities of the business from their personal financial activities. ➢ Net accumulated investment is not required to be distinguished from profit earned. It is the owner’s option to invest in the business, withdraw from the business, and distribute profit. Ⅰ. Single Proprietorship
卡.Single ProprietorshipAdvantageSole proprietorship is easy to start up, subject tofewer regulations relative to other types ofbusinesses, the owner has full autonomy with regardtobusinessdecisionsAnother advantage is that one takes all the profits ofthe business.Disadvantage> A business organized as a sole trader will likely havea hard time raising capital since it has to make up forall the business's funds.The owner of the business has unlimited liability asheisresponsibleforthebusiness'sdebtsbecausehehascontroloverthebusiness
Advantage ➢ Sole proprietorship is easy to start up, subject to fewer regulations relative to other types of businesses, the owner has full autonomy with regard to business decisions. ➢ Another advantage is that one takes all the profits of the business. Ⅰ. Single Proprietorship Disadvantage ➢ A business organized as a sole trader will likely have a hard time raising capital since it has to make up for all the business's funds. ➢ The owner of the business has unlimited liability as he is responsible for the business's debts because he has control over the business